Cryptoverse: Bitcoin miners find themselves stuck in a bear pit

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Spare a thought for the embattled bitcoin miner.

By the end of 2021, miners were the toast of the town with a surefire path to profit: hook up powerful computers to cheap power, solve fiendishly complex math puzzles, then sell newly minted coins on the open market. boom.

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A year is a long time in crypto.

Global bitcoin mining revenue fell to $17.2 million a day amid a crypto winter and global energy crisis, down about 72% from last November, when miners were accumulating $62 million a day, according to data from Blockchain.com.

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« Bitcoin miners continued to see their margins squeeze – the price of bitcoin fell, mining difficulties increased, and energy prices soared, » said Joe Burnett, chief analyst at BlockwareSolutions.

This put a lot of pressure on some players who bought expensive mining machines or rigs, betting on rising bitcoin prices to recoup their investment.

Bitcoin is trading around $19,000 and has failed to break above $25,000 since August, let alone recover November’s all-time high of $69,000.

At the same time, the process of solving puzzles to mine tokens has become more difficult as more miners come online. This means they have to devour more computing power, which further increases operating costs, especially for those without long-term electricity pricing agreements.

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Bitcoin miners’ profit for one terahash per second of computing power has fluctuated between $0.119 and $0.070 a day since July, down from $0.45 in November last year and around its lowest levels in two year.

The grim picture could also be here to stay: The Luxor Hashrate Index, which measures mining revenue potential, has fallen nearly 70% so far this year.

2140: THE LAST BITCOIN

It was painful for the miners.

Shares of Marathon Digital, Riot Blockchain and Valkyrie Bitcoin Miners ETF have fallen more than 60% this year, for example, while crypto-mining data center operator Compute North filed for bankruptcy last week.

Yet mining is ultimately a long-term proposition – the last bitcoin is expected to be mined in 2140, more than a century away – and an opportunity to spy in the dark.

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« The best time to get in is when the market is low, the same mining rigs that cost $10,000 earlier this year, you can get it for 50%-75% off right now, » said William Szamosszegi, CEO of Sazmining Inc, which plans to open a bitcoin mining operation powered by renewable energy.

Indeed, many miners are reducing their purchases of rigs, forcing manufacturers to cut prices.

For example, the popular S19J Pro rig sold for $10,100 in January on average, but is now selling for $3,200, Luxor analysts said, also noting that bulk order prices for some mining machines have risen. dropped 10% over the past week.

Chris Kline, co-founder of crypto investment platform Bitcoin IRA, said miners should be « hyper-focused » on energy efficiency, both to reduce costs and to avoid any repercussions from regulations related to the change. climatic.

“From managing their balance sheet, processing units and energy costs, miners will look to stay afloat regardless of current market conditions,” he added.

(Reporting by Lisa Pauline Mattackal and Medha Singh in Bengaluru; Editing by Tom Wilson and Pravin Char)